Calculation of Work Permit Levy on Expatriate Employees – from SR 2,400 to SR 9,600

Ministry of Labor of Saudi Arabia increased the Work Permit Levy or Maktab-al-Amal Fee for the expatriates working in Saudi Arabia on 1st Muharram 1434 (November 14, 2012). The Work Permit Levy or Maktab-al-Amal Fee used to be SR 100 before November 14, 2012, per expatriate employee. An additional Work Permit Levy or Maktab-al-Amal Fee of SR 2,400 was imposed on expatriate employees for businesses who maintain less than 50% Saudi employees from November 14, 2012. If you remember, at that time businesses protested against this fee, many businesses got their licenses canceled but nothing changed.

Also Read:  Procedure to Pay Work Permit Levy or Maktab-al-Amal Fee using Internet Banking

In December 2016, with the announcement of the Budget 2017, Saudi Government has introduced a plan to impose dependent’s fee and increase the Work Permit Levy or Maktab-al-Amal Fee gradually. We have explained the calculation of dependent’s fee earlier. In this post, we shall only talk about the calculation of work permit levy and how it will increase over the years. It should be noted that companies need to pay Work Permit Levy or Maktab-al-Amal Fee to renew the work permit of employees. An updated work permit is a prerequisite to renewing iqama in Saudi Arabia. The work permit levy or Maktab-al-Amal fee is not applicable to all expatriates living in the Kingdom, there are some categories of expatriates who are exempt from Work Permit Levy

Calculation of Work Permit Levy or Maktab-al-Amal Fee: From the beginning of January 2018, the Work Permit Levy or Maktab-al-Amal Fee will increase to SR4,800 per expatriate employee per annum. However, those companies and businesses who are maintaining more than 50% Saudi staff will have to pay SR 3,600 for every expatriate employee per annum. (see detailed calculation below)

The next year, starting from January 2019, the Work Permit Levy or Maktab-al-Amal Fee will increase to SR 7,200 per expatriate employee per annum. However, those companies and businesses who are maintaining more than 50% Saudi staff will have to pay SR 6,000 for every expatriate employee per annum. (see detailed calculation below)

The Work Permit Levy or Maktab-al-Amal Fee will take its last jump in the year 2020. Starting from January 2020, the Work Permit Levy or Maktab-al-Amal Fee will increase to SR 9,600 per expatriate employee per annum. However, those companies and businesses who are maintaining more than 50% Saudi staff will have to pay SR 8,400 for every expatriate employee per annum. (see detailed calculation below)

Does company have to pay an additional fee for all employees if they don’t maintain 50% Saudization? Fortunately, the answer is NO. Let’s assume that a company has 100 employees and 40% employees of the company are Saudis and 60% are Foreigners.

In the year starting from January 2018, the company will pay SR 4,800 for its 10% expatriate employees and SR 3,600 for its remaining 50% expatriate employees.

In the year starting from January 2019, the company will pay SR 7,200 for its 10% expatriate employees and SR 6,000 for its remaining 50% expatriate employees.

In the year starting from January 2020, the company will pay SR 9,600 for its 10% expatriate employees and SR 8,400 for its remaining 50% expatriate employees.

Why Saudi Government increased Work Permit Levy or Maktab-al-Amal Fee? There are two basic purposes behind the increase of the Work Permit Levy or Maktab-al-Amal Fee. It will boost non-oil revenue for Saudi Arabia and hence reduce dependence on oil. It will also make an expatriate employee more expensive in the eyes of the employer. For example, in the year 2020, one employer will be paying SR 800 per month per expatriate employee. But he doesn’t have to pay it if he hires a Saudi employee. Moreover, a Saudi employee will also increase chances to maintain 50% Saudization which will get him an additional SR 1,200 discount per expatriate employee per annum.

Also Read:  7 Categories of Expatriates who are exempt from Work Permit Levy (Maktab-al-Amal Fee)

Who will pay this cost? Legally, all the costs related to iqama renewal and Work Permit Levy or Maktab-al-Amal Fee needs to be paid by the employer as per Article 40 (1) of Saudi Labor Law. All the medium and large sized entities will pay the cost but what about small sized entities which constitute the majority of employers. Many employers cannot bear the financial burden of current Work Permit Levy or Maktab-al-Amal Fee and they ask their employees to pay it themselves. How do you expect them to pay SR 9,600 per expatriate employee per annum?

  • marwa print

    Hello sir ,,,i would like to know that , i am going to issue final exit for my family this week, & my iqama expires after 40 days,,, the thing i want to confirm that after issuing final exit for my family i want to travel with my family on exit re-entry ….is it possible that i issue exit for my family & renew my iqma & travel with them same time ???
    Please guide me as soon as possible ,, its urgent because i want to take decision this week…

error: Content is protected !!